Bro, dont mean to dash your hopes, but even during the last ACTUAL recession in 1997, properties in decent locations hardly goes down, unless we're talking about over-supply situation here, like MK and KLCC. In fact you might end up paying more as the property correction works both ways

As of today, there are decent bargains for one to catch, provided they looked hard enuff. Can still get a 3 room condo in KL for less than 170k, nearby LRT sumore. Wait somemore and properties like this will correct itsef UPWARDlS

This post has been edited by Pai: Jun 18 2008, 10:10 PM

I think in 1997 there were quite a number of fire sales. You know, those who got burnt to a crisp in the market and had to liquidate.

Then there was the exodus of foreign professionals out of the country. Quite a number of condos in Bangsar went vacant. Those who couldn't hold on had to sell.

This post has been edited by joe_mamak: Jun 19 2008, 10:14 AM

Push and pull by bulls and bears is a sign of healthy market When market sentiment is at extreme, it is time to be on the other side.

my company have a substantial amount of overdraft facilities from the bank..normally we will utilised only a portion of this so called facities granted by the Bank and they remain there as long as we have a need for it. recently, Bank Negara has given directive to all Banks to call back any unused facilities which are floating in the market. e.g I have RM10 million facilities and only use RM2 million of it in the form of overdraft. The remainder RM8 million will be called back. If you need more int he near future, you have to put in a fresh application, you can't ride on your prvious facilities anymore. Bank Negara is tightening on credit facilities for reasons best known to them only. With the current rise of NPL's and i believe this will increase further i can't see how the value of the property market can be sustained anymore.

It is not a matter of hoping house prices will fall for those who can't afford, house prices will fall if real income detiorates and demand wilts. In London, during the 90's house prices in the city centre fell by almost 30% and stayed that way for almost 5 years. Why? that was during the crash of the yuppies era. Short term gains was wiped out overnight, interest rates rosed beyong sustainable level, banks went under due to NPL's. Oil prices went up, remember the Gulf war. World economy slump. Like i said, property owners of course wished that their property will continue to appreciate but then if there's no buyer, and when you are struggling to service loans, all that it is worth is on paper only..if you have holding power thats fine. but what if you don't. Can you still hold on?

Interesting to know that Bank Negara is reducing easy credit or excess money in the system.

I read this article recently in Malaysiakini http://malaysiakini.com/opinions/84519

Here are some excerpts (for full article, please support and subscribe to Malaysiakini).

However in another report on 28 May, Dr Zeti announced that broad money (M3) expanded by RM 51.6 billion or at an annual rate of 12.1% at the end of quarter one (Q1). If the growth of money for Q1 is 12.1% and the growth for GDP is 7.1%, the difference of 5% should be translated into inflation. That extra 5% of money in circulation is causing havoc in consumer prices.

Yet, when it was announced in April that the inflation rate for 2007 is 2%, no economist in the country lifted an eyebrow. No politician from both sides challenge the statistic. That was despite the Statistics Department reporting – Food and Non-Alcoholic Beverages prices increasing by 47.1%, Transport prices increasing by 18.3%, Housing and Utilities prices increasing by 13 .9%.

These three components which matter most to lower middle income and the poor, recorded double digit inflation, and should have immediately set of alarms.

During the past few months the price of rice has increased from RM 22.30 per 10 kg to RM 34.50. Milk powder from RM 37.00 per 2 kg to RM 42.00. Tea powder from RM 6.50 per 500gm to RM 9.50. Butter from RM 5.40 to RM 9.00. Jam from RM 5.40 to RM 8.80. Shahrir Samad should take note that it's not 'a joke'.

Dr Zeti has led like a pied piper playing to the tune of economic calm. Economists and politicians seem mesmerised to her tune that we can weather off the economic turbulence ahead. Meanwhile the people are encouraged to spend. Carefree use of credit cards. Banks are in competition to offer instant approved loans, some with zero interest for 6 months.

....

Money is spent on the stock market, as we saw the KLSE rise to 1500 points before the general elections, to encourage more spending and purchasing. If the spending is on goods and services from current economic output, then it is good and helps add up the GDP. But with cheap loans at below inflation rates the money quickly go towards speculative spending for quick profits, like second hand properties, stocks and shares.

This will inflate the economy and very soon bubbles build up. Encouraged by the artificial demand, business people will venture into more risky projects and speculative capital. All these lead to financial distortions and spin the wheel of inflation faster. When the tide turns, buoyed with rising interest rates, it will be financial ruin for many. Perhaps the tide has not turn, because the floodgate is kept locked, at least for now.

dudes, from what i gather, blr is going up. investor heavy and new places such as mont kiara and klcc will suffer a dip, as these investors probably have committed a large portion of their net worth towards property investment, and also as these places are new, their loans will still be owing to the bank.

more mature places like ttdi, bangsar will not suffer as much as most houses there are fully paid off. rise in blr wont affect them. also, i feel the prices there are not over-inflated, unlike klcc and mk.

Same feel here mate

KLCC and MK has too many speculators and the supply level is just overwhelming. Those who r looking to buy in these areas will be spoilt of choice.

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Added on June 19, 2008, 5:37 pmThe firesale u mentioned, what was the degree of discount available back then? 20%? 30%?

This post has been edited by Pai: Jun 19 2008, 05:37 PM

Thanks for the clarification. In my case, I can hold on ... easily. I've a finger in every pie. If prices shoot up, I'll benefit moderately. If recession comes, the markets crash and everything burns, I'll cry tears of joy coz I'll benefit greatly.

All is not lost as the chinese proverbs says, for every crisis an opportunity looms..thats why there will be people who lose during bad times but there will also be people who gain during a crisis..everything in life has its own way of self correcting itself..

True then the place counts too, but if say, for Bangsar where the houses are fully-paid up, I don't think we can say that the prices will still appreciate during a recession. Why ?

Sure, nobody would be throwing, but if someone is to sell at a high price (thinking there would be appreciation), will there be takers, since everybody is having difficulty ? Likw what mentioned here, we can sell at whatever prices that we want, but if nobody buys, then still no point.

yep just hope your present properties do not depreciate too much, and you manage to grab a few undervalued ones. that will be ideal!

Then its no longer a "property depreciation" issue, its a liquidity issue intead.

The issue during recession is always liquidity. Prices will hold but there arent many takers around.

I don't have the details. Only heard from one or two agents that there were some really "good" deals going around because the sellers were desperate. But potential buyers were also hesitant and afraid.

What a chaotic and depresing time that was. Job cuts. Companies went bust. MBf imploded. Developers had to abandon projects, we still see some of them around KL today. The exchange rates were at ~ RM2.6 to US$1 and ~ RM1.8 to S$1 (pre-crisis). Danaharta was set up to solve the NPL problem. I remember one agent telling me at that time, the expatriates are leaving and they won't be coming back. He stressed on the word and.

Demand just went down and property prices went down along with it.

On a personal note, my family property which we rented out, the tenant asked for a reduction or else.....

While things may not be as bad now as back in 1997, it doesn't look too promising either.

Oh okay,... it's called a liquidity issue then, and not a depreciation matter. Thank you.

With petrol rebates distributing around POS, do you think it will still affect the property value?

With petrol going down 15 sens just days ago, do you think it will still affect the property value?

I think it's the best time to buy now because the longer u wait, the poorer you'll get in real terms, i.e. u get eaten up by inflation.

You put in bank only earn 3-4% but outside material prices are going up by at least 30%. Best to buy now in high end areas like Taman Tun, Damansara Heights or KLCC....will never go wrong. These are strategic areas and you'll not only save in fuel/transport costs to get daily provisions, but living in KL is also a status symbol. That explains the breakaway between property prices in London and other parts of the UK. Same goes to HK Island and Singapore Bukit Timah, Tanglin etc. There's a difference when you live in the capital and the interstate of any country.

People say oversupply, but you must realise freehold land in KL is getting scarce and so is property in KL...oversupply in other areas won't affect prime area properties in KL which are still one of the cheapest in the region. In HK Island, u can't even get a 500 sf flat for RM 6.5 million or 1 million pounds.

To think that so many people around can afford luxury cars like 5 series, E-classes or Porsches costing around RM 400k-RM 1 mil. RM 2-3 million is nothing to them already.

Housing is a necessity not a luxury, developers putting off projects = drop in supply so there's no other way for prices than up up up in the long run.

That's why it's no surprise that a business maverick like IOI Corp boss(3rd richest in country) is acquiring Menara Citibank. If he thinks it's gonna become cheaper, why bother to buy it now?

My 2 cents

This post has been edited by kazuya369: Aug 28 2008, 03:33 AM